The purpose of these Regulations is to regulate and monitor the conduct of rating activities in the Kingdom and to specify the procedures and conditions for obtaining an authorisation to conduct rating activities.

(a) Any reference to the “Capital Market Law” in these Regulations shall mean the Capital Market Law issued by Royal Decree No. M/30 dated 2/6/1424H.

(b) Expressions and terms in these Regulations have the meaning which they bear in the Capital Market Law and in the Glossary of defined terms used in the Regulations and Rules of the Capital Market Authority, unless the contrary intention appears.

(a) These Regulations apply to rating activities which are carried out in the Kingdom.

(b) Rating activities are carried out in the Kingdom if such activities are conducted in whole or in part in the Kingdom and includes:

• 1) dissemination of credit ratings to the public by any means or medium, whether in the Kingdom or elsewhere; or

• 2) distribution of credit ratings by way of subscription or membership, whether in the Kingdom or elsewhere.

(c) A credit rating is excluded from the scope of these Regulations if it is issued by the government of the Kingdom or a governmental agency in the Kingdom.

(d) These Regulations do not apply to:

• 1) credit ratings issued by any person for its internal commercial or industrial purposes, including assessing creditworthiness of its counterparties, provided that such credit rating is not circulated to any third party;

• 2) credit ratings issued by financial sector entities for an internal purpose of assessing its economic capital position, internal modelling, or risk management, provided that such credit rating is not circulated to any third party, except to its regulator only; or

• 3) credit ratings issued by any person pursuant to an individual order, provided exclusively to the person who placed the order and not intended for public disclosure or distribution by subscription.

No person may carry out rating activities in the Kingdom or hold itself out as an authorised credit rating agency unless it has been authorised by the Authority in accordance with these Regulations.

The Authority may waive a provision of these Regulations in whole or in part as it applies to an applicant for authorisation or an authorised credit rating agency either on an application from the applicant for authorisation or the authorised credit rating agency or on its own initiative.

Any person subject to these Regulations may appeal to the Committee in respect of any decision or action that the Authority takes under these Regulations.

(a) For the purposes of these Regulations, an applicant for authorisation means a legal person that is applying for authorisation to carry out rating activities in the Kingdom. An applicant for authorisation becomes subject to these Regulations from the date of submission of its application.

(b) An application for authorisation may be submitted by the founders or controlling shareholders of an applicant for authorisation if the applicant for authorisation is not yet established. The founders or controlling shareholders become subject to the provisions that apply to an applicant for authorisation from the date of submission of the application for authorisation.

(c) An application for authorisation must be made on the application form prescribed by the Authority and be accompanied by the information and documents required in Annex 1 of these Regulations.

(d) An applicant for authorisation must notify the Authority immediately of any material changes to the information provided to the Authority for the purposes of application for authorisation.

(a) An applicant for authorisation must either be:

• 1) incorporated in the Kingdom; or

• 2) a foreign credit rating agency authorised, or registered (as applicable) in a jurisdiction whose regulatory standards and requirements are at least equivalent to those of the authority.

(b) For the purposes of sub-paragraph (2) of paragraph (a) of this Article, the Authority shall have the absolute discretion to assess whether the foreign regulator has regulatory standards and requirements at least equivalent to those of the Authority.

(c) An applicant for authorisation must demonstrate to the Authority that:

• 1) it is fit and proper and has adequate expertise and resources to carry out rating activities in the Kingdom;

• 2) it has managerial expertise, financial systems, risk management policies and systems, technological resources, policies and procedures, and systems that are sufficient to fulfil its business and regulatory obligations; and

• 3) its governing body, rating analysts, employees and any other natural person who will be involved in the applicant’s rating activities have the necessary qualifications, skills, experience and integrity

(d) In addition to the authorisation requirements stated in Article 9 and Article 10 of these Regulations, the Authority may stipulate additional authorisation requirements to be met by, or specific conditions or limitations to be applied to either all applicants for authorisation, or particular applicants or categories of applicants as it considers appropriate.